Do entrepreneurial businesses need an FD? The question is more divisive than one might imagine. Financial Director blogger Maurice O’Shea wrote about this on financialdirector.co.uk recently and received a flurry of responses.
“Looking back over the businesses I have met in the last three months, I’m surprised how often management accountants fail to provide essential commercial information. I’m working with profitable, well-run businesses that have survived and grown over the last two years – and they are businesses that do not have a high-calibre finance director,” O’Shea writes of his experience as an FD for a portfolio of growing businesses.
“It is my belief that entrepreneurial businesses need an FD more than those that are not,” Martin Haywood, a divisional FD at Alcon Components comments in response. “The FD attributes need to be somewhat entrepreneurial rather the traditional role of saying no.
“An FD complementing the entrepreneur is a key element to the balance between business growth in a controlled framework, appeasing the needs of other stakeholders to whom, it may be considered, the entrepreneur pays lip service – in other words, a great tag team,” he says.
And it is teamwork with the FD that O’Shea observed as lacking from growing businesses he has worked with. “[MDs of growing businesses] are so unsupported by their FDs and accountants,” he wrote.
“One MD of an £8m business takes two hours each day to produce and manage his cashflow forecast. He had hired two FDs in a row who had spent months advising him how to raise the finance necessary to provide the working capital needed to grow his business, and he wanted a chunk of equity. He still didn’t know what good financial controls and reporting looked like.”
The FD and the entrepreneur “have to be a double act; they have to be on the same wavelength and work exceptionally well together”, adds Linda Andrews, FD for Glasgow-based Eurofriction. “An entrepreneur tends to be a creative, sales-led individual who needs accurate, timely, commercially focused financial information in order to make the right deals.”
Steve Waldron, financial controller at London-based Grange Hotels, summed it up. “Entrepreneurs are precisely the breed that needs someone to point out that ‘the emperor has no clothes’, to quote the fairytale – or indeed, as Sir Humphrey would say, ‘that’s a very brave decision, minister’. They traditionally have a short attention span and need the kind of due diligence that a financial man can supply.”
Maurice O’Shea is managing principal for the South East at the FD Centre. Read the full blog and comments here